Hitachi H1 loss rises on lower sales, power plant shutdown

TOKYO: Hitachi said Tuesday its group net loss widened in the six months through September, hurt by mushrooming costs of repairing nuclear power plant turbines and poor home appliance sales.

The Tokyo-based industrial electronics giant posted a group net loss of 78.09bn yen ($665m) in the first half of its fiscal year, compared to a loss of 10.95bn yen a year earlier. Group sales rose 8.1% to 4.771 trillion yen ($40.6bn) from 4.413 trillion yen on improvements in its auto parts and flat-panel TV businesses. But dragging down profits was the cost of turbine repairs at nuclear reactors run by Chubu Electric Power and Hokuriku Electric Power, the company said.

Chubu’s Hamaoka nuclear power plant in central Japan shut down earlier this year when one of its four Hitachi-made turbines started rumbling. Workers later found a turbine blade had broken at its base and had fallen to the floor.

A slump in sales of air conditioners and DVD recorders, as well as a drop in prices of hard disk drives amid intensifying competition, also contributed to the loss, the company said in a statement. Hitachi kept its full-year group loss projection at 55bn yen ($467.3m).

Hitachi is among Japanese electronics makers that had reported a gradual recovery after suffering a slump when the prices of electronics products plunged and cheaper Asian rivals began to gain global market share.

But the company has again struggled against faster-moving rivals in industries like hard disk drives. Hitachi, the world’s third-largest supplier of the drives, has been losing market ground in disk drives that go into mobile gadgets, laptops and other consumer electronics.

Meanwhile, Hitachi has made moves to strengthen its auto business, announcing a tender offer for shares of car audio and navigation system maker Clarion earlier this month to raise its stake to 50%. The company says it expects both the domestic and global markets for auto entertainment and navigation systems to expand. Analysts, however, have said the company has a long way to go before it can hope to grow into a successful auto-parts maker.

Also adding to Hitachi’s woes have been lawsuits from former employees demanding compensation over technology patents. Earlier this month, a former employee filed a lawsuit for 200m yen ($1.7m) from the company over technology associated with duplicating the patterns of integrated circuits on chips in mass production, which he developed in the 1980s at Hitachi.

The employee received only 20m yen ($168,000) for the patent from Hitachi, but alleges the company made more than 8bn yen ($67m) from licensing of the patent. That came only a week after Japan’s Supreme Court ordered Hitachi to pay 163m yen ($1.4m) to another former worker for developing technology needed to read CDs and DVDs.

Hitachi shares fell 2.03% to 675 yen ($5.75) in Tokyo. Hitachi shares gained earlier in the year but have slipped in recent months to about what they were a year ago.